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WUBA vs. RNG: Which Stock Should Value Investors Buy Now?

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Investors interested in Internet - Software and Services stocks are likely familiar with 58.com Inc. and RingCentral (RNG - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, 58.com Inc. is sporting a Zacks Rank of #1 (Strong Buy), while RingCentral has a Zacks Rank of #3 (Hold). This means that WUBA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

WUBA currently has a forward P/E ratio of 23.47, while RNG has a forward P/E of 165.12. We also note that WUBA has a PEG ratio of 1.06. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. RNG currently has a PEG ratio of 8.33.

Another notable valuation metric for WUBA is its P/B ratio of 2.65. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, RNG has a P/B of 29.62.

Based on these metrics and many more, WUBA holds a Value grade of B, while RNG has a Value grade of F.

WUBA is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that WUBA is likely the superior value option right now.


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